New bill of law allowing for issuance of dematerialised securities issued on the blockchain with central account keepers

On 27 July, the Luxembourg parliament published a new bill of law n° 7637 (the “Bill of Law”) that will amend the following two laws:

• the law of 6 April 2013 on dematerialized securities (the “2013 Law”); and
• the law of 5 April 1993 on the financial sector, as amended (the “FSL”).

The Bill of Law aims to modernise the legal framework pertaining to dematerialised securities by recognising and allowing for the issuance of securities directly under a demateralized form byusing a distributed ledger technology, today mostly known as the “blockchain”.

As a reminder, Luxembourg already took a first step in modernising the legal framework in relation to securities that are registered on the blockchain by amending in 2019 the law of 1 August 2001 on the circulation of securities, as amended. The amendments made to the aforementioned law allowed for account keepers, such as credit institutions or investment firms, to maintain securities accounts (comptes-titres) and credit securities on such securities accounts “within or through secured electronic registration mechanisms, including distributed electronic ledgers or databases” [(Article 18a) of the law of 1 August 2001 on the circulation of securities].

In line with the above, the Bill of Law now takes a step further and allows for central account keepers or liquidation organisms to keep issuance accounts (comptes d’émission) and carry out the registration of securities within or through secured electronic registration mechanisms, including distributed electronic ledgers or databases.

It is to be noted that the legislator purposely used a broad wording in relation to the technology that may be used for the registration of such securities in order to allow for the law to cover new technologies that may be developed in the future.

The Bill of Law further brings another major change by allowing for EU credit institutions and EU investment firms to act as central account keepers for non-listed debt securities. This means that credit institutions and investment firms will be able to also keep certain securities issuance accounts by using blockchain technology.

The Bill of Law is accessible here: Law of 1 August 2001 on the circulation of securities

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